Spain warns over Repsol takeover
MADRID - Agence France-Presse
A worker walks past a Repsol gas station in Madrid yesterday. The company is facing hard times in Argentina. AP photo
Madrid has threatened to retaliate after Argentina announced it will expropriate a subsidiary of Spanish oil giant Repsol, warning the move breaks a “good understanding” between the countries.Spain will take “all measures it considers appropriate” to defend the interests of Repsol and Spanish businesses abroad, Industry Minister Jose Manuel Soria told a news conference on April 17.
Spain is considering action on diplomacy, trade, industry and energy, he said, without giving further details. The government backed the company, which says it will take legal action after Argentinian President Cristina Kirchner announced she would nationalise Repsol’s YPF subsidiary.
The European Union warned Buenos Aires that it was sending the wrong signal to investors, who dumped Repsol shares, sending them 6.06 percent lower on the Madrid stock exchange.
In New York, trading in YPF remained suspended for a second day on April 17.
Argentina’s decision to take a 51-percent stake of YPF virtually wipes out Repsol’s 57.4-percent holding.
U.S. credit ratings agency Moody’s downgraded YPF to B3 from Ba3, warning that a further downgrade was possible.
It said the decision reflected “uncertainty regarding how the government will manage YPF, including uncertainty regarding the company’s future operating and financial profile.”
Repsol executive chairman Antonio Brufau said Argentina’s move “will not remain unpunished.” Repsol would seek an amount at least equal to the value of its stake, which the firm estimates at $10.5 billion, the Repsol chief said. The company had a wide range of options including constitutional, commercial and civil actions to counter the “manifestly illegal and gravely discriminatory” move, he said.
‘Shot itself in the foot’
Spain’s government summoned Argentina’s ambassador, Carlos Bettini, for the second time in five days to ask why Buenos Aires had ignored warnings against intervening in the Repsol subsidiary. “Argentina has shot itself in the foot in a serious way,” Foreign Minister Jose Manuel Garcia-Margallo told reporters.
Speaking in Mexico, Spanish Prime Minister Mariano Rajoy said the “decision breaks the previous good understanding between the two countries.” It was a “negative decision ... without justification,” he told the World Economic Forum on Latin America.
Later on April 17, Argentina’s deputy economy minister Axel Kicillof, who helped mastermind the takeover, accused Repsol’s chief of running up its debt.
Kicillof, speaking to lawmakers, said Brufau had hidden the actual value of the company, after incurring about $9 billion in debt.
“He who speaks about excellent management owes $9 billion. Sometimes he hides the debt with investment. Brufau told us he does not have the money to invest. Where did they put it that they do not have it?” Kicillof said.
The proposal for the takeover of YPF is to be debated next week in the Senate, where the ruling party holds a majority, as well as in the Chamber of Delegates.
Mexico’s President Felipe Calderon has offered strong support to Spain. Mexican state oil company Pemex has a 9.5 percent stake in Repsol. European Union foreign affairs chief Catherine Ashton said Argentina’s move sent a “very negative signal” to global investors.
Banks' bad loans jump
MADRID - The Associated Press
The Bank of Spain said yesterday that bad loans accounted for 143.8 billion euros ($188.84 billion) of a loan total of 1.76 trillion euros in February. The figure was up 3.79 billion euros up from January, when it represented 7.91 percent.
The bank added that the total figure for loans was down by 6.36 billion in February compared to a month earlier.
Spanish banks’ bad loans and toxic assets are among the chief reasons investors are concerned about the country’s ability to handle its finances and avoid seeking an international bailout.
